Relationship among Economic Growth and other Macroeconomic Variables: A Study of Pakistan

Abstract

This study is investigating the short run and long run relationship among major macroeconomic variables and economic growth for the economy of Pakistan during 2000 - 2015. Autoregressive distributed lag (ARDL) model and bounds test have been applied to estimate the short run and long run relationship between GDP and  other major macroeconomic variables like,  labour force, rate of capital formation, money supply, inflation rate, trade rate, foreign direct investment (FDI) and unemployment. ARDL model indicates significant relationship between labour force, FDI and unemployment economic growth, in the long run, at 1% and 5% level.

Keywords: Macroeconomic variables; capital formation; money supply; inflation; trade; FDI; unemployment; economic growth; ARDL model.

JEL Code: O1; O4; F43.

DOI: 10.7176/JRDM/54-07

Publication date: April 30^th 2019